Canadian 25-Basis Point Interest Rate Cut As Expected – Currency Thoughts
Canadian 25-Basis Point Interest Rate Cut As Expected
September 4, 2024
The Bank of Canada’s Governing Council agreed as expected to its third quarter percentage point reduction since June. Consumer price inflation has receded from 8.1% at peak in June 2022 to a 40-month low of 2.5% last month. The central bank interest rate had been lifted by four percentage points in 2022 and another 75 basis points to 5.0% during the first seven months of 2023, then held at that level until an initial cut this past June. At 4.25% after today’s action, the rate is back to its end-2022 level. According to a released statement, officials will proceed with continuing caution:
Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up. Governing Council is carefully assessing these opposing forces on inflation. The labor market continues to slow, with little change in employment in recent months. Wage growth, however, remains elevated relative to productivity.
Copyright 2024, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Bank of Canada
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